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4.25% 30 Year Fixed Is Here!
Old 12-21-2008, 10:57 AM   #1
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4.25% 30 Year Fixed Is Here!

Mortgage Rates | Get the Best Current Mortgage Rates in Seconds

I doubt you'll hear this from the doom and gloom news media.

How sweet it is!
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Proper qualifications....proper goals.....proper results.
Old 12-21-2008, 11:01 AM   #2
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Proper qualifications....proper goals.....proper results.

Now, if all the banks, etc. will require folks to have the proper qualifications with enough down payment %, without too much other debt, with reasonable steady employment, etc. etc. and rates are low maybe we can begin to get out of the mess and get some real movement on real estate sales going again vs. the not real "flipping" of property for a short term profit.
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Old 12-21-2008, 12:13 PM   #3
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Mortgage Rates | Get the Best Current Mortgage Rates in Seconds

I doubt you'll hear this from the doom and gloom news media.

How sweet it is!
Unfortunately it's not quite here yet. I just did an online quote. For a 300k loan at 4.25%, it wants $9,455 for lender fees.
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Old 12-21-2008, 01:52 PM   #4
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Unfortunately it's not quite here yet. I just did an online quote. For a 300k loan at 4.25%, it wants $9,455 for lender fees.
Yes, the real question is what is the APR?
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Old 12-21-2008, 02:11 PM   #5
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Yes, the real question is what is the APR?
I don't know why they are allowed to post any number but the APR. It doesn't matter if I'm getting a 1% loan if processing fees make the APR 10%.
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Old 12-22-2008, 02:41 PM   #6
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Yes, the real question is what is the APR?
If you click the column that says "APR-Calculate", it will include the APR's for all the listed rates. The APR for the 4.25 rate loan is around 4.5 (still pretty good!), and the lowest cost loan is 5.375 (apr =5.379) with fees of only $162.00, but it's a sneaky looking chart because they don't detail the points vs. the other lender fees.
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Old 12-22-2008, 05:50 PM   #7
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If you click the column that says "APR-Calculate", it will include the APR's for all the listed rates. The APR for the 4.25 rate loan is around 4.5 (still pretty good!), and the lowest cost loan is 5.375 (apr =5.379) with fees of only $162.00, but it's a sneaky looking chart because they don't detail the points vs. the other lender fees.
The APR is not a good metric because it spreads the points and fees over the life of the loan, i.e. 30 years while the typical life of the loan is less than 7 years. If you spread the points and fees over 7 years or the expected life of the loan, the APR would be much higher if the points and fees are high.
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Old 12-22-2008, 10:00 PM   #8
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Originally Posted by jazz4cash View Post
If you click the column that says "APR-Calculate", it will include the APR's for all the listed rates. The APR for the 4.25 rate loan is around 4.5 (still pretty good!), and the lowest cost loan is 5.375 (apr =5.379) with fees of only $162.00, but it's a sneaky looking chart because they don't detail the points vs. the other lender fees.
Yeah, I answered that way without going to the web site. I was just pointing out the importance of figuring an APR since the OP just shouted about the rate. Once I went there I saw that feature.

As always it's very tricky and these sites are notorious for baiting with the lowest terms that almost nobody will actually qualify for. The devil's in the details.
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Old 12-22-2008, 10:03 PM   #9
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Originally Posted by thefinancebuff View Post
The APR is not a good metric because it spreads the points and fees over the life of the loan, i.e. 30 years while the typical life of the loan is less than 7 years. If you spread the points and fees over 7 years or the expected life of the loan, the APR would be much higher if the points and fees are high.
Very good point that people need to take into account. You can talk yourself into it by figuring a 30 yr duration but if you sell in 5 years the math is quite different.

It's also why it's difficult to assess a refil without knowing the specific individual's circumstances.

For me, I'm staying for the duration so the straight APR calculation is valid.
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Old 12-23-2008, 12:06 AM   #10
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Very good point that people need to take into account. You can talk yourself into it by figuring a 30 yr duration but if you sell in 5 years the math is quite different.

It's also why it's difficult to assess a refil without knowing the specific individual's circumstances.
I agree. IMO the best way to approach re-financing is to use an online calculator to determine if the package makes sense financially. If your calculated pay back (in months) is less than the time-frame that you are likely to sell the house - you will be ahead. This is the best calculator that I have found:

Mortgage Refinance Calculator: Refinancing One FRM Into Another FRM

I am in the process of re-financing and my calculated pay-back is in 12 months. My loan provider quoted the same pay-back period so either the numbers are accurate or they use the same calculator?!
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Old 12-23-2008, 12:30 AM   #11
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I agree. IMO the best way to approach re-financing is to use an online calculator to determine if the package makes sense financially. If your calculated pay back (in months) is less than the time-frame that you are likely to sell the house - you will be ahead. This is the best calculator that I have found:

Mortgage Refinance Calculator: Refinancing One FRM Into Another FRM

I am in the process of re-financing and my calculated pay-back is in 12 months. My loan provider quoted the same pay-back period so either the numbers are accurate or they use the same calculator?!
On the other hand it depends on how you define your pay back. Most people will refi into the same term loan they had and take advantage of a lower payment. Then they calculate how long it will take to recoup costs based on that lower payment.

For me it was a different calculus. I had 17.5 years left on a 30 yr loan and refi'd into a 15 yr, dropping my interest rate from 6 to 4.25. My payment stayed about the same, but I pay it off 2.5 yrs earlier with about a 20K interest savings (it's actually worth more if you count the opportunity gain for my cash flow in that 2.5 yrs). So it doesn't actually pay off for me for 15 yrs but it's still definitely worth doing. Sometimes you have to take the long view.
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Old 12-23-2008, 01:43 AM   #12
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On the other hand it depends on how you define your pay back. Most people will refi into the same term loan they had and take advantage of a lower payment. Then they calculate how long it will take to recoup costs based on that lower payment.

Yeah, that's my situation - a very straightforward calculation in my case. My refi swapped a standard 30-year fixed to another at a much lower interest rate.

There is also the added benefit of securing a low interest rate if you intend to carry the mortgage into retirement. Generating 4.25% of income from your investment portfolio to cover the mortgage interest is a lot easier than having to generate >6%. Especially in today’s markets!
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